Retail Sales Picture
May was the first month for retailers reporting same-store sales since Wal-Mart opted to stop reporting the figure. Wal-Mart in recent years has often outperformed the competition and its weight in the index is such that a good or bad month by Wal-Mart could sway the overall retail figure much higher or lower than it would have been otherwise. As such, it shouldn't be a big surprise that without Wal-Mart's strong sales in the current climate, the May figures look pretty bad. ICSC's index showed a 4.6 percent decline compared with the same period last year. (The report can be viewed here, membership required.) In contrast, in April retailers posted a same-stores sales gain of 0.7 percent over April 2008. Retail Forward's figure, meanwhile, (computed off 32 retailers) shows a 4.2 percent decline. Retail Forward's April results showed a 0.9 percent increase. Meanwhile, according to the Commerce Department, May retail sales rose 0.5 percent meeting analyst's expectations.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $340.0 billion, an increase of 0.5 percent (±0.5%)* from the previous month, but 9.6 percent (±0.7%) below May 2008. Total sales for the March through May 2009 period were down 9.7 percent (±0.5%) from the same period a year ago. The March to April 2009 percent change was revised from -0.4 percent (±0.5%)* to -0.2 percent (±0.2%)*. Retail trade sales were up 0.5 percent (±0.7%)* from April 2009, but 10.8 percent (±0.7%) below last year. Gasoline stations sales were down 33.8 percent (±1.5%) from May 2008 and motor vehicle and parts dealers sales were down 19.6 percent (±2.3%) from last year.
April and March numbers both came in worse than expected, February and January were both better than expected.
Research Corner
Madison Marquette published a piece looking at the risk outlook of various retailers to gauge their relative risk of bankruptcy or other major restructuring that could impact commercial real estate owners and operators. It's a useful report with observations on many major chain retailers currently facing pressures. You can view the piece here. It was originally posted to the Places blog.
National Retailer Risk Tracking by Madison Marquette
In another piece of research, Taubman Centers and Shop America Alliance LLC in partnership with the U.S. Department of Commerce/Office of Travel & Tourism Industries (DOC/OTTI) released the International Shopping Traveler. Highlights of The International Shopping Traveler study results include:
- Nearly 20 percent of these travelers say they have already booked their next trip to the U.S. and an additional 50 percent are very likely to visit and shop in the next 12 months.
- For a large number of travelers, shopping influences destination choice. Overall, 30 percent said it was a factor in their choice of destinations, while 23 percent said it was a key reason for the trip.
- These travelers allocated a sizeable portion of total trip spend to shopping activities, spending on average $1,063 per person on shopping out of a total average of $3,692 per total trip, per person. While spending varies by market, the percent of shopping spend reported in the total trip spend was an average of 29 percent, and as high as 40 percent with Mexican Shopping Travelers.
The executive summary can be viewed below.
The International Shopping Traveler - Exec Summary - 2009
Notable Headlines
May 13, Business Week profiled CompUSA and its unlikely comeback.
May 13, DDI magazine explores Target's efforts to open 100 mini markets.
May 14,Business Week wrote about how Whole Foods is faring better than expected during the recession.
May, 15, The Boston Globe looks at TJX Co.'s recent success with A.J. Wright.
May 17, New York Post, Dillard Family Split Over Poor Performance.
May 19, BNet Retail, Macy's Thinks Outlets as Rivals Reap Their Benefits.
May 19, New York Times, New Starbucks Ads Seek to Recruit Online Fans.
May 19, New York Post A Saks Battle Brews.
May 19, New York Times, Mini Versions of Big-Box Stores.
May 22, CNNMoney.com, Stores that may not make it to recovery.
May 26, New York Post, Syms and Men's Wearhouse Look to buy Filene's.
May 26, CNBC, Consumer Confidence Sees Biggest Jump in 6 Years.
May, 27, USA Today reported on Apple Corp.'s intentions to continue to open new stores. It will remodel 100 stores and open 25 new ones, including a fourth location in New York City.
May 27, In acquisitions news, Toys 'R' Us acquired FAO Schwarz.
May 27, Retailer Zale Corp. had a rough quarter and, as a result, is speeding its pace in closing stores.
June 1, According to the Dallas Morning News Blockbuster says it remains committed to brick-and-mortar stores. The company has been refurbishing locations. It's relabeling its locations "Blockbuster Media" rather than "Blockbuster Video". June 1, Bloomberg reports that Starbucks is pushing its landlords to grant 25 percent reductions in its leases.
June 1, The Chicago Tribune reports on Sears' latest gambit--a concept called MyGofer, a drive-through general store that is supposed to be a marriage between online shopping and bricks and mortar. There's some more information on the concept at Sears' site.
June 1, BNET Retail details how Best Buy execs are attempting to push the firm internationally.
June 2, Drapers reported that British retailer TopShop is moving ahead with its planned U.S. rollout.
June 2, Discount retailer Big Lots is is testing an upscale prototype.
June 2, The Financial Times reported on Westfield's efforts to work with its London tenants over a dispute on fees.
June 3, Microsoft announced that it will begin selling video games for the Xbox via download. According to Seeking Alpha, this spells big trouble for GameStop. The video game retailer had a record year in 2008. But if video games start becoming increasingly available over the Internet, the retailer could face issues. It's similar to what happened with Blockbuster Inc. where DVD-by-mail and Video-on-Demand services have weakened a previously strong business model.
June 4, CoStar looked at how small retailers are seizing opportunities to expand in the current economic climate.
June 8, Reuters previews the upcoming back-to-school shopping season, which begins next month. The season kicks off a critical stretch for the retail sector and ranks only behind the holiday shopping season in terms of importance to the sector. At the moment, consumers are still exhibiting a reluctance to spend. Consumers are spending on necessities, but discretionary spending is still weak.
June 8, Supermarket News offered some details on Price Chopper's new LEED silver store. Features at the 64,000-square-foot store include the first commercially used fuel cell in upstate New York, which ties to the generator to power the entire store if an outage occurs; skylights to reduce the amount of power for lighting; LED-lighting in all refrigerated cases; ceiling light fixtures with high-output ballasts; heat generated from compressors that heats water for sinks; floor tiles, shelving and steel-beam supports made from recycled products; exclusive use of green cleaning solvents; paint that's low in volatile organic compounds; and a biohydrator machine that converts meat scraps and produce trimmings to a liquid that's used as fertilizer.
June 8, Men's Wearhouse agreed to buy Filene's Basement for about $60 million. A few days later, however, it backed out of the deal.
June 15, Wal-Mart is planning to build or remodel hundreds of "zero carbon" stores in China. Carrefour and Tesco are also looking to build green locations in the country.
June 15, Reuters posted a piece saying that retail landlords need a reality check. The story makes the argument from the tenants' perspective--quoting Nina Kampler, executive vice president at Hilco Real Estate--that more concessions are in order if retail real estate owners want to avoid more store closings.
June 15, Retailer Daily looks at how quick service restaurants like Chick-Fil-A are having success expanding during the current recession.
June 15, A thread on RetailWire looked at how Genesco, the parent company of Journeys and Lids, is using its leverage as a healthy retailer to win some concessions from landlords. The firm says it has renegotiated 181 leases across its store base that were up for renewals or had kickouts in 2008, 2009 and 2010. Across the 181 lease renegotiations, Genesco received a five percent reduction in rent on an accounting basis.
June 15, VMSD has some details on Gap's plans to remodel 50 Old Navy stores. The firm has tested a new prototype at two locations in California and has been pleased with the results. So it's going to take the design into more locations.
June 15, Reuters had a brief report looking at how troubles with chain stores has opened up some opportunities for independent retailers to enter malls. In a related piece, the Milwaukee Journal Sentinel looks at how some malls have turned to small, private retailers as temporary tenants to fill vacancies. "The mom-and-pop is now king," said Heidi A. Maybruck, a Columbus, Ohio, real estate agent who handles temporary and cart leasing for Steiner & Associates, the operator of Bayshore. Another Reuters story--a roundup of a panel at Reuters Global Retail Summit--asks, "Will empty big-box stores ever get filled?"
June 16, The New York Times' DealBook wrote of a brewing battle at Children's Place. It's former CEO began a proxy contest last month to place three candidates on the company’s board. Current management, naturally, is resisting.
June 17, George Whalin raved about Apple's continued success. Specifically, Whalin wrote about Apple's new store design. The most recent move is to a new store design. The first of the new stores recently opened in Scottsdale, Arizona. Visually spectacular, with a 75-foot-long skylight, the glass front and rear allows people to see all the way through the store. It is unlikely they will be able to do the same in most of their other stores, but it certainly adds to this eye-catching design.
June 17, TWICE--that's the cleverly named "This Week In Consumer Electronics"--writes up Best Buy's radical store remodel plans. Its planning to "alter its store layout to emphasize services and test new product categories." Interestingly, a Best Buy at 23rd and 6th Ave. in New York City recently shifted some things around. I wonder if that was a test of this new layout.
June 22, George Whalin wrote about the tough times for apparel retailers. He highlights the closure of RUEHL and Eddie Bauer's bankruptcy. It is estimated that Eddie Bauer's restructuring could result in 120 store closings. Meanwhile, Passions of a Zealot also looked at the demise of Abercrombie & Fitch's RUEHL. He writes that the failure was in part due to the firm's arrogance.
Abercrombie’s downfall with Ruehl (and the considerable sales drop at other Abercrombie brands of late) came from their arrogance to refuse to acknowledge the state of the economy and price their clothes accordingly – or at the least, provide sales or discounts or specials. For almost a year now Abercrombie’s President and CEO, Mike Jeffries has continually stated that Abercrombie (and affiliated concepts) are premium brands, discounting them or placing sales on their products – even temporarily – will damage the reputation of the brands and make it more difficult for the brands to return to their premium status.
On the flip side, Aeropostale, one of the few bright spots in the apparel sector, is launching a new kids concept called P.S. VMSD has more. "The company says the concept offer trend-right merchandise at compelling values within a fun, playful and inviting store environment. The first P.S. from Aeropostale store is planned to debut in June, with an online component shortly thereafter."
June 22, The Retail Doctor wrote a post with some interesting tips for retailers looking for good locations: Check the trash. Find out the trash collection days and times for your intended area. Go and observe how many have put their trash out prior and you’ll have a good indication of how dynamic your neighborhood really is.
June 22, Wal-Mart is having some trouble with its in-store clinics, according to Business Week. Two years ago it said it planned to open clinics at 400 of its stores by 2010. By February 2008, the firm had been able to get 78 up and running so far. Now, however, it is down to 31 due to failed venture-capital collaborations, a few faulty partnerships, and a reassessment of the business model. In other health and retail news, the Mayo Clinic is opening a location at Mall of America. Officials aren't sure yet what services the site will offer, but they could include diagnostic screenings, wellness counseling and other services that might direct patients to the home campus in Rochester, Minn.
June 22, You've probably noticed of late that Pizza Hut has been hawking everything but its pizza. It's pushing its P'Zone thing and its pasta. This, apparently, was in a run-up to a adding a secondary branding mark for the franchise. As the Consumerist reports, it will now also be known now as "The Hut".
June 22, Finish Line struck a deal to sell its 75-unit Man Alive brand for $7 million.
Store Closure Update Bankruptcies and Liquidations
:- Jan. 7, Goody's liquidates, closing 287 stores
- Jan. 8, Against All Odds files for bankruptcy protection, operates 64 stores overall, plans to close West Coast stores
- Jan. 13, Shane Co. files for bankruptcy, operates 23 stores
- Jan. 14, Gottschalks files for bankruptcy, operates 58 stores, Update: March 31, Gottschalks will liquidate
- Jan. 16, Circuit City to Liquidate, closing 567 stores
- Feb. 6, Fortunoff, operates 20 stores
- Feb. 6, Bruno's, operates 66 stores
- Feb. 12, S&K Famous Brands, operates 136 stores; Update: Feb. 19, plans to close 30. Update: May 26, plans to close rest.
- Feb. 17, Innovation Luggage, operates 10 stores
- Feb. 23, Ritz Camera, operates about 1,000 stores; Update, April 6, closing 300 camera stores and 120 Boater's World stores
- March 6, Joe's Sports & Outdoor, operates 30 stores
- March 25, Bi-Lo, operates 215 stores
- April 13, Z Gallerie, operates 56 stores
- April 13, Ultra Stores, operates 181 stores
- May 5, Filene's Basement, operates 25 stores, sold 17 Update: Syms and Vornado buy the chain.
- May 28, Anchor Blue, operates 177 stores, closing 50
- May 29, Oilily, operates 33 stores, closed 8
- June 17, Eddie Bauer, operates 371 stores
Potential Bankruptcies & Liquidation Impact: 1,526 confirmed closures out of about 3,319 stores
Announced Closings:
- Jan. 8, New York & Co., 50 stores
- Jan. 8, Macy's, 11 stores
- Jan. 9, Supervalu, 50 stores
- Jan. 13, Cost Plus, 26 stores
- Jan. 20, Yankee Candle, 28 Illuminations stores
- Jan. 21, Filene's Basement, 11 stores
- Jan. 22, Phillips-Van Heusen, 175 stores
- Jan 22, Brown Shoe, up to 35 Famous Footwear stores
- Jan. 26, Home Depot, 48 stores
- Jan. 29, Starbucks, 200 U.S. Stores (plus 100 international)
- Jan. 29, Chico's, up to 25 stores
- Feb. 9, Talbots, 20 stores
- Feb. 24, Jimmy'Z, 11 stores
- Feb. 24, Z. Gallerie, 25 stores
- Feb. 25, Zale Corp., 115 stores
- Feb. 26, Gap, 50 net closings
- Feb. 27, Sears, 44 stores
- March 3, Virgin Megastores, 6 stores
- March 6, Ann Taylor, 37 stores in 2009, 163 total by end of 2010
- March 18, Drug Fair, 11 stores
- March 23, Pier 1, 80 stores
- April 3, Rite Aid, 117 stores
- April 21, Kirkland's, up to 40 stores
- April 29, Jones Apparel Group, 225 stores
- June 8, J.Jill, 75 stores
- June 16, Ruehl, 29 stores
Total Closings: up to 1,544 U.S. stores
Potential Impact of All Announcements to Date: 3,070 closures out of up to 4,863 potentially affected U.S. stores